Users fear repeat of FTX collapse after brief withdrawal outage at Binance

Binance restored withdrawals on Tuesday after a brief outage, which it claimed was caused by “some technical difficulties.” However, netizens claim it was due to executives siphoning funds from the platform.

At around 2:36 AM UTC Tuesday, Binance wrote on X that it was aware of withdrawal issues on the platform and told users it was working on a fix to restore services to normal “as soon as possible.”

Just 3 minutes later, the exchange announced it had identified the issue and that withdrawals “have resumed and are being processed.” 

Even though the exchange said the issue was technical and quickly resolved, user follow-up on social media indicated the disruption lasted about 20 minutes. Several critics alleged misconduct and urged customers to withdraw funds, while others warned of a “bank run” scenario similar to the final days of the fallen exchange FTX.

Binance withdrawal outage starts online barrage

According to posts circulating on X citing blockchain data, there were heavy outflows from Binance wallets late into Tuesday night. One shared message alleged billions of dollars in stablecoins like Tether’s USDT and top-cap cryptocurrencies, leaving exchange addresses in a suspicious manner.

The post also accused the Binance executives of wrongdoing, although this has not been proven, as the exchange has not reported any solvency issues. The exchange also did not reveal the specific technical problem, although some observers note that such issues are common in the crypto trade.

Bitcoin and Ethereum have both witnessed over 23% price drops in the last three months, with the former sliding down to a price level last seen 10 months ago. A market slump may have prompted traders to swap their tokens for USDT and withdraw en masse, but a section of Crypto Twitter believes there is foul play, as in the case of the Sam Bankman-Fried-led FTX.

In November 2022, a report revealed weaknesses in Alameda Research’s balance sheet, a trading firm tied to Bankman-Fried. Alameda held large amounts of FTT, a token created by FTX that was purportedly intended to serve as its stock equivalent, similar to Binance’s BNB. 

FTT had market value but limited liquidity under stress, so a price decline would have definitely threatened Alameda’s financial position. After that report, Binance’s chief executive at the time, Changpeng Zhao, said his firm would liquidate its FTT holdings. 

As concerns about the crypto market piled on the exchange and Alameda’s business, FTT’s price dropped sharply, forcing customers to withdraw funds from FTX. After billions of dollars exited the platform in a matter of days, FTX decided to halt withdrawals entirely. 

Cryptopolitan later reported that the exchange faced an $8 billion shortfall, an event that left many investors scarred since. Any service disruption at a large exchange now is enough to fill social chatter with comments of fear, uncertainty, and doubt.

“’We are currently using your liquidity to meet our own margin calls. Please hold. In the Boardroom, we call this ‘Gating the Herd.’ Rest assured, the ‘fix’ will arrive precisely 15 minutes after the market bottom has been printed and the insiders have re-positioned. Not your keys, not your coins, not your exit,” said one X user mocking Binance’s announcement.

Crypto market volatility ignites suspicion

The Binance episode occurred during a market bloodbath that began over the weekend, when Bitcoin slid below $76,000 for only the second time in over a year. According to CoinGlass data, $2.56 billion in liquidations occurred between Saturday and Sunday.

Zhao wrote a statement on X Monday rejecting what he called “pretty imaginative FUD.” He blasted claims that Binance sold large amounts of Bitcoin to trigger the drop, insisting wallet balances change when users withdraw, not through internal dumping.

The former Binance CEO also dismissed suggestions that he derailed a “supercycle” in crypto prices. He joked that if he had such influence, “he would use it differently.”

Other accusations sent Zhao’s way included market practices in the Tron ecosystem, in which he was accused of working with Tron DAO founder Justin Sun to manipulate the market. A woman claiming to be a former partner of Sun alleged that Tron and Binance collaborated and paid influencers to impact token prices.

“I am willing to fully cooperate with an SEC investigation and to submit all relevant WeChat chat records, as well as evidence provided to me by his employees, proving his market manipulation activities,” the woman’s statement read.

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